An investor purchased an interest in a limited partnership, paying $10,000 in cash and signing a recourse note to the partnership under a letter of credit for $40,000. Which of the following statements are TRUE?
I. The investor's tax basis will be $10,000.
II. The investor's tax basis will be $50,000.
III. The investor's maximum loss will be $10,000.
IV. The investor's maximum loss will be $50,000.
A) I and IV.
B) II and IV.
C) I and III.
D) II and III.
Answer: B) II and IV.
Business
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